Running your own business means you have to have steady finance to support you. It is not easy especially in the beginning because you have to raise money strategically. Most entrepreneurs rely on loans to help fund their business. However, not everyone is qualified that the banks may reject the proposal. There are many reasons for that to happen. Entrepreneurs also often rely on donation. However, it is not enough to cover all business funds. One of the most common ways is to ask for family or friends for funds. Having large social networks can be advantageous because then you have people you can ask for help.
The idea of asking family or friends for business funds
There are pros and cons of raising money from family or friends. It can cause inconvenience at some points regardless how close you are them. There is high possibility for the relationship to strain. Here are some possible issues regarding to asking for business funds from your family or friends:
It is hard to set aside personal feelings when family or friends are involved even if it is a matter of business. Just because they are very close people to you doesn’t mean they are always in good condition to give you help. Some of them may refuse to lend you money for various reasons. This kind of rejection may make you feel like less important for them and start asking if your relationship is genuine or not. It will be easy for you to assume negative things.
Money and family
Your family and friends may consider lending you money because of their speculation on your personality. They are not investing in the business. Sometimes, they just trust you blindly because you are someone they are close to. While it is a good thing, it can be burdensome. The pressure will be heavier on your shoulder. It can cause other issues related to emotional or social obligations. You will feel like you have to always do good and prove something.
It is important to maintain your relationships with people around you including family and friends. Asking them for business funds have risk to damage your relationship if you do it the wrong way. If yo do it right, it can be beneficial for both sides. For example, make sure that you ask only those who you think can afford to invest, financial wise. Also, it is important to ask the money in a more business vibe-like meeting. You have to be prepared with your business plan and other necessities such as product sample, etc.
Be clear and forward
Also, do not be so vague in giving information about the business. Make sure to be transparent and answer all their answer diligently. You have to pay fair market as well even if they feel bad about it. It is only fair for both parties. When they agree, make sure to put everything in writing and hire attorney. If they need time to think, let them have their time to consider and don’t rush them.